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Prefer a Yield - Cramer's Lightning Round (10/10/08)

This is similar to what is reported at LIFETIME FITNESS where the CEO put up a lot of his own common shares to get money to run the company. That doesn't sound like something one would do unless they had a huge stake in the company and the company was in financial trouble.

In Lifetime's case, they had also announced a sale and leaseback of 2 of their properties, raising 50 million. Unfortunately, the stock has tanked daily for 2 weeks, and whomever was holding the shares did a margin call and yesterday sold half a million of the shares, thus driving down the share price even more.

These 2 isolated incidences don't seek typical of corporate management. When the Feds 'inject liquidity' into a bank, what do you picture? A square building with money now in all the desk drawers? OK now what? Lend it to anybody? That's what got us in trouble. Lend it to Lifetime Fitness because they have a money making company and are still expanding?

So what's to make that bank lend out their new money? Chances are, the employees don't decide on their whims whether to lend or not. If they don't lend it's because they are restrained by the head honcho, who has just seen other CEO's get canned by the Feds when they were closed that bank. These bosses are simply preserving their own 'jobs' and ridiculous pay bonuses by holding on to all ther cash they can